Second Quarter Review of Asset Allocation: Risks and Opportunities

July 25, 2019

Overall, the second quarter was positive for financial markets, thanks to strong economic fundamentals and expected Fed stimulus. Unemployment remains low at 3.7% and inflation (1.8% year over year) is near the Fed’s long-term target of 2%. However, there are increasing concerns about a global economic slowdown and early forecasts for 2Q GDP growth are around 1.5%, far lower than what we’ve seen in recent quarters. Globally, the most important trends we see are the following:

  • The U.S.-China trade conflict remains ongoing as talks between the two countries resumed, but little progress has been made;
  • The Federal Reserve is expected to cut rates in July and markets are forecasting another one to two cuts by the end of the year;
  • Business sentiment is declining ­— most notably in the PMI manufacturing index, which is now dangerously close to falling below its growth threshold;
  • Britain continues to struggle with its Brexit and elected a new PM (Boris Johnson) on July 23rd;
  • China and Europe are expected in increase their stimulus measures to combat slow growth and overall global uncertainty;
  • Late-cycle dynamics in credit and equity markets.

The impact of these trends is explored further in this newsletter as we review second-quarter performance and expectations going forward for each of the major asset classes.

Read > Second Quarter Review of Asset Allocation: Risks and Opportunities

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Related Content

The Good Old Days chart of the week


The Good Old Days

It may be tempting for some investors to “time” the market in order to enhance returns in times of market…


All is Not Lost for 2019

Given this week’s volatility driven by (brief) yield curve inversion, the ongoing U.S.-China trade dispute, disappointing economic data from Germany,…


The Yield Curve Inverts: Time to Hunker Down?

This morning, the key range of the U.S. Treasury yield curve that is viewed as the bellwether of recessions —…


Don’t Cry for Me, Argentina

On Sunday, August 11th, Argentina’s current president since 2015, Mauricio Macri, lost the Argentine presidential primary election by a much…


Lower for Longer, or Negative Forever?

With Trump’s surprise announcement of additional tariffs at the beginning of this month — a day after the Fed’s rate…

line chart showing S&P 500 price level from sept 18 through august 7, 2019


August Off to a Difficult Start

Since peaking late in the third quarter of 2018, U.S. equities have experienced large swings in performance. Following the worst…

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >